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PJSC PHOSAGRO – PhosAgro 2Q18 EBITDA Grows 53% YoY to RUB 18.7 bn
PJSC PHOSAGRO - PhosAgro 2Q18 EBITDA Grows 53% YoY to RUB 18.7 bn
– PhosAgro ("PhosAgro" or "the Company") (Moscow Exchange, LSE: PHOR), one of the world’s leading vertically integrated phosphate-based fertilizer producers, today announces its interim condensed consolidated IFRS financial results for the three months (2Q) and six months (1H) ended
), with PhosAgro’s EBITDA margin expanding to 33% in 2Q 2018 from 27% in 2Q 2017. Net income (adjusted for non-cash FX items) for 2Q 2018 jumped by 91% year-on-year to
RUB/USD rates: average 2Q 2018: 61.8; average 2Q 2017: 57.2; as of
EBITDA is calculated as operating profit adjusted for depreciation and amortisation.
** Net Income adjusted calculated as Net Income minus Foreign exchange gain (net)
said: “We have been able to significantly strengthen our financial performance by delivering on PhosAgro’s carefully-chosen long-term development strategy, which includes a focus on organic production growth and vertical integration, constant control over operating costs, and completion of large-scale investment projects on time and on budget at a time when the first signs of price recovery have begun to emerge. With a 50% increase in EBITDA, doubling of net income and a reduction in our leverage, we continue to strictly adhere to our dividend policy (the size of the dividend recommended by the Board of Directors nearly doubled year-on-year) while maintaining investments at the level required to further advance our development.
“As part of our long-term strategy, this has allowed us to maintain our industry leadership in terms of cash cost of production Rub Usd Exchange , this has allowed us to maintain our industry leadership in terms of cash cost of production, and to weather a period of consistently low prices and trade restrictions—both embargoes and duties—with minimal impact on our financial stability. In an extremely volatile macroeconomic situation, the predictability and stability of fiscal policy remains a fundamental factor in making investment decisions, especially taking into account the long period required to earn a return on investments and our status as a public company with a significant share of foreign minority shareholders.
“In terms of the medium-term outlook, we believe that the positive trend in prices is sustainable, as is PhosAgro’s return to mid-cycle profitability levels, enabling us to balance the volume of new investments to ensure stable high growth rates while offering existing and new shareholders profitability on par with our top peers in
The average price of DAP (FOB Tampa) in 2Q 2018 was
per tonne, which implies a year-on-year increase of
The key drivers of the recovery in phosphate prices were: 1) idling of Plant City by Mosaic, resulting in a deficit on the North American market and higher import volumes; 2) robust import demand in
due to loss-making domestic production of DAP 3) slower than expected ramp up of new units in
The average price of urea (FOB Baltic) in 2Q 2018 was
per tonne in 2Q 2017. The price increase was driven by further cuts in urea exports from
(due to higher gas prices) and expectations of lower export from
In 2Q 2018 revenue increased by 27% year-on-year to
) on the back of doubling in revenues from DAP and urea sales, which was partially offset by a 19% year-on-year drop in MAP revenue (overall company’s MAP sales declined by 35% year-on-year due to lower demand in
). The weighted average revenue per tonne (in RUB) for DAP/MAP, NPK and Urea increased by 25%, 20% and 23% year-on-year, respectively.
Comparing export and domestic markets, Rub Usd Exchange , while domestic revenue remained almost flat, growing by 5% year-on-year.
A detailed revenue breakdown by key products is presented below:
In 2Q 2018 gross profit increased by 37% year-on-year to
), with gross profit margin expanding to 47% from 44% in 2Q 2017. Gross profit and margin performance for the phosphate and nitrogen segments were as follows:
The phosphate segment saw a 24% year-on-year increase in gross profit to
), with a gross margin of 48%, compared to 47% in 2Q 2017.
Gross profit for the nitrogen segment almost tripled year-on-year to
). Gross margin for the segment jumped by 22 p.p. year-on-year to 52%.
), up by 53% year-on-year, while EBITDA margin expanded to 33% from 27% in 2Q 2017. Net profit adjusted for non-cash FX items amounted to
The RUB depreciated by 8% year-on-year against the USD during the quarter (the average RUB/USD exchange rates for 2Q 2018 and 2Q 2017 were
respectively), which had a net positive impact, as prices for most of the Company’s products are denominated in USD, while costs are primarily RUB-based. The depreciation of the RUB as of
Net operating cash flow in 2Q 2018 increased by 74% year-on-year to
) primarily driven by the growth in profitability. Free cash flow in the second quarter was positive at
), up by 29% year-on-year primarily due to the low base effect (in 2017 some capex payments were postponed until the second half). The main capex spending was on scheduled maintenance and development of the upstream business, as well as on construction of new sulphuric and nitric acid plants.
), representing a decrease in the net debt/LTM EBITDA ratio to 2.07x thanks to positive dynamics in EBITDA performance.
Cost of sales grew by 19% year-on-year in 2Q 2018 to
Materials and services grew by 18% year-on-year to
) mainly driven by an 8.5% year-on-year increase in PPI and 9.2% growth in overall fertilizer production;
) as a result of the commissioning of new ammonia and urea facilities in 3Q 2017 and modernisation of ANOF-3;
Costs for natural gas were up by 64% year-on-year to
) on the back of 60% year-on-year growth in ammonia production, where gas is the main feedstock;
Salaries and social contributions increased by 17% year-on-year to
), due to an increase in headcount and growth in average salary;
Sulphur and sulphuric acid costs increased by 44% year-on-year to
) on the back of a 52% year-on-year increase in the average realised sulphur price (sulphur equivalent);
) on the back of a 13% growth in purchase prices, which was partially offset by lower consumption;
Ammonium sulphate costs were up by 75% year-on-year to
) due to more than doubling NPS production volumes year-on-year;
Costs for ammonia decreased by 67% year-on-year to
) thanks to the ramp up of PhosAgro’s new ammonia line and the ensuing substantial decrease in purchased volumes.
Administrative expenses for 2Q 2018 grew by 5% year-on-year to
In 2Q 2018, selling expenses increased by 36% year-on-year to
). The main factors behind this growth were: 1) freight, port and stevedoring expenses rose by 76% year-on-year to
) primarily due to a 27% year-on-year increase in export sales of fertilizers shipped by sea, as well as 18% growth in shipping rates and changes in incoterms (more CFR sales) combined with RUB devaluation; 2) spending on transportation grew by 8% year-on-year to
), driven by the 10% year-on-year growth in overall volumes.
, which are expected to reach 5.5 million tonnes of DAP in 2018/19, despite the current weakness in the rupee;
as a result of the favourable price environment for soybeans (growth in demand from
) and the lag in buying activity in 2018 (10-30% year-on-year decrease);
in October-December, when local producers will turn their focus to the domestic market.
At the same time, rising competition and the ramp-up of new capacities from Ma’aden 2 and the final, fourth unit at OCP are the main factors that could limit further upward movement in phosphate prices.
According to IFA, global fertilizer consumption between 2018/19 and 2022/23 is due to rise with a CAGR of 2.0-2.5%. The growth in consumption of phosphates and potash (excluding
) is forecast to outperform growth in nitrogen fertilizer use.
PhosAgro will hold a conference call and webcast today at 14:00
The call will be held in English, with simultaneous translation into Russian on a separate line.
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1 877 887 4163
) is one of the world’s leading vertically integrated phosphate-based fertilizer producers in terms of production volumes of phosphate-based fertilizers and high-grade phosphate rock with a P2O5 content of 39% and higher (according to IFA, Fertecon and CRU).
PhosAgro’s main products include phosphate rock, 39 grades of fertilizers, feed phosphates, ammonia, and sodium tripolyphosphate, which are used by customers in 100 countries spanning all of the world’s inhabited continents. The Company’s priority markets outside of
PhosAgro’s shares are traded on the Moscow Exchange, and Global Depositary Receipts (“GDRs”) for shares trade on the London Stock Exchange (under the ticker PHOR). Since
, the Company’s GDRs have been included in the MSCI Russia and MSCI Emerging Markets indexes.
Consolidated Interim Condensed Statements of Profit or Loss and Other Comprehensive Income for the three and six months ended
Items that may be reclassified subsequently to profit or loss
Consolidated Interim Condensed Statement of Financial Position as at
Consolidated Interim Condensed Statement of Cash Flows for the six months ended
Loss on disposal of property, plant and equipment and intangible assets
Operating profit before changes in working capital and provisions
Rub Usd Exchange
Acquisition of property, plant and equipment and intangible assets
Proceeds from disposal of property, plant and equipment
Net (decrease)/increase in cash and cash equivalents
Source: PR Newswire (August 23, 2018 - 6:00 AM EDT)
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